Case 1:19-cv-01869-LPS Document 79 Filed 07/09/21 Page 1 of 11 PageID #: 2841
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`BLDCINC.,
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`Plaintiff,
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`V.
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`APPLE, INC.,
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`Defendant.
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`C.A. No. 19-1869-LPS
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`John G. Day, Andrew C. Mayo, ASHBY & GEDDES, Wilmington, DE
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`Daniel J. Melman, Guy Yonay, Sarah Benowich, Shaoul Sussman, PEARL COHEN
`ZEDEK LATZER BARATZ LLP, New York, NY
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`Mark C. Rifkin, Thomas H. Burt, WOLF HALDENSTEIN ADLER FREEMAN & HERZ
`LLP, New York, NY
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`Attorneys for Plaintiff
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`David E. Moore, Bindu A. Palapura, POTTER ANDERSON & CORROON LLP, Wilmington,
`DE
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`Daniel G. Swanson, Jason C. Lo, Jennifer J. Rho, Raymond A. LaMagna, GIBSON, DUNN &
`CRUTCHER LLP, Los Angeles, CA
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`Cynthia E. Richman, Amalia Reiss, GIBSON, DUNN & CRUTCHER LLP, Washington, DC
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`H. Mark Lyon, GIBSON, DUNN & CRUTCHER LLP, Palo Ato, CA
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`Chris Whittaker, GIBSON, DUNN & CRUTCHER LLP, Irvine, CA
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`Attorneys for Defendant
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`MEMORANDUM OPINION
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`July 9,2021
`Wilmington, Delaware
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`

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`Case 1:19-cv-01869-LPS Document 79 Filed 07/09/21 Page 2 of 11 PageID #: 2842
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`3^
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`STARK, U.S. District Judge:
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`Pending before the Court is a renewed motion to dismiss Blix Inc.'s ("Blix" or "Plaintiff')
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`antitrust allegations against Defendant Apple, Inc. ("Apple" or "Defendant"). (D.I. 70) The
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`operative complaint is Blix's Second Amended Complaint. (D.I. 59) (hereinafter, "Complaint" or
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`"Cmplt.") Previous iterations alleged infringement of U.S. Patent No. 9,749,284 (the "'284
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`patent") as well as certain antitrust claims (D.I. 13), which the Court dismissed in a November 30,
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`2020 memorandum opinion (D.I. 42), which also granted leave to file the new Complaint (D.I. 59).
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`Following oral argument on March 12, 2021, the Court dismissed all of Blix's patent infringement
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`allegations due to the patent-in-suit being directed to patent-ineligible subject matter under 35
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`U.S.C. §101. (D.I.69)
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`As the parties note, the operative Complaint presents new and different antitrust allegations
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`and theories of liability than appeared in the earlier complaints. (See D.I. 71 at 1-2; D.I. 74 at 1)
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`On April 15,2021, Apple filed a motion to dismiss these antitrust claims. (D.I. 70) The motion
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`was fully briefed and then, on June 8, 2021, argued to the Court. (See D.I. 71, 74, 75; see also D.I.
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`78 ("Tr.")) For the reasons stated below, the Court will grant Apple's motion.
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`L
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` LEGAL STANDARDS
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`A.
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`Motion to Dismiss
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`Evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires the
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`Court to accept as true all material allegations of the complaint. See Spruill v. Gillis, 372 F.3d 218,
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`223 (3d Cir. 2004). "The issue is not whether a plaintiff will ultimately prevail but whether the
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`claimant is entitled to offer evidence to support the claims." In re Burlington Coat Factory Sec.
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`Litig, 114 F.3d 1410, 1420 (3d Cir. 1997) (internal quotation marks omitted). Thus, the Court may
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`grant such a motion to dismiss only if, after "accepting all well-pleaded allegations in the
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`1
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`

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`Case 1:19-cv-01869-LPS Document 79 Filed 07/09/21 Page 3 of 11 PageID #: 2843
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`complaint as true, and viewing them in the light most favorable to plaintiff, plaintiff is not entitled
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`to relief." Maio v. Aetna, Inc., 221 F.3d 472,481-82 (3d Cir. 2000) (internal quotation marks
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`omitted).
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`However, "[t]o survive a motion to dismiss, a civil plaintiff must allege facts that 'raise a
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`right to relief above the speculative level on the assumption that the allegations in the complaint are
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`true (even if doubtfiil in fact).'" Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007)
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`(quoting BellAtl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A claim is facially plausible
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`"when the plaintiff pleads factual content that allows the court to draw the reasonable inference that
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`the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
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`At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that discovery
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`will reveal evidence of [each] necessary element" of a plaintiff's claim. Wither son v. iView Media
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`Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).
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`The Court is not obligated to accept as true "bald assertions," Morse v. Lower Merion Sch.
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`Dist., 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), "unsupported
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`conclusions and unwarranted inferences," Schtiylkill Energy Res., Inc. v. Pa. Power & Light Co.,
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`113 F.3d 405,417 (3d Cir. 1997), or allegations that are "self-evidently false," Nami v. Fauver, 82
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`F.3d63, 69 (3d Cir. 1996).
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`B.
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`Antitrust Standing
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`As the Third Circuit explained in Pace Electronics, Inc. v. Canon Computer Systems, Inc.,
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`213 F.3d 118,120 (3d Cir. 2000):
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`To state a claim for damages under section 4 of the Clayton Act, 15
`U.S.C. § 15, a plaintiff must allege more than that it has suffered an
`injury causally linked to a violation of the antitrust laws. See
`Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477,489, 97
`S. Ct. 690, 50 L.Ed.2d 701 (1977). In addition, it must allege
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`Case 1:19-cv-01869-LPS Document 79 Filed 07/09/21 Page 4 of 11 PageID #: 2844
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`antitrust injury, 'Vhich is to say injury of the type the antitrust laws
`were intended to prevent and that flows from that which makes
`defendants' acts unlawful." Id.
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`C.
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`Sherman Act Section 2
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`The Third Circuit's opinion in Broadcom Corp. v, Qualcomm Inc. sets out the standards for
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`analysis of a Sherman Act Section 2 claim:
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`Section 2 of the Sherman Act, in what we have called "sweeping
`language," makes it unlawful to monopolize, attempt to
`monopolize, or conspire to monopolize, interstate or international
`commerce. It is, we have observed, "the provision of the antitrust
`laws designed to curb the excesses of monopolists and near-
`monopolists." LePage's Inc. v. 3M, 324 F.3d 141,169 (3d Cir.
`2003) (en banc). Liability under § 2 requires "(1) the possession of
`monopoly power in the relevant market and (2) the willful
`acquisition or maintenance of that power as distinguished from
`growth or development as a consequence of a superior product,
`business acumen, or historic accident." United States v. Grinnell
`Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698,16 L.Ed.2d 778
`(1966)....
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`The existence of monopoly power may be proven through direct
`evidence of supracompetitive prices and restricted output. United
`States V. Microsoft Corp., 253 F.3d 34, 51 (D.C. Cir. 2001) (en
`banc); Rebel Oil Co. v. Atl. RichfteldCo., 51 F.3d 1421,1434 (9th
`Cir. 1995). It may also be inferred from the structure and
`composition of the relevant market. Harrison Aire, 423 F.3d at
`381; Microsoft, 253 F.3d at 51
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`The second element of a monopolization claim imder § 2 requires
`the willful acquisition or maintenance of monopoly power. As this
`element makes clear, the acquisition or possession of monopoly
`power must be accompanied by some anticompetitive conduct on
`the part of the possessor. Verizon Common's Inc. v. Law Offices of
`Curtis V Trinko, LLP, 540 U.S. 398,407,124 S.Ct. 872,157
`L.Ed.2d 823 (2004). Anticompetitive conduct may take a variety
`of forms, but it is generally defined as conduct to obtain or
`maintain monopoly power as a result of competition on some basis
`other than the merits. LePage % 324 F.3d at 147. Conduct that
`impairs the opportunities of rivals and either does not further
`competition on the merits or does so in an unnecessarily restrictive
`way may be deemed anticompetitive. Aspen Skiing Co. v. Aspen
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`Highlands Skiing Corp., 472 U.S. 585, 604-05 & n. 32,105 S.Ct.
`2847, 86 L.Ed.2d 467 (1985). Conduct that merely harms
`competitors, however, while not harming the competitive process
`itself, is not anticompetitive. See Brooke Group Ltd. v. Brown &
`Williamson Tobacco Corp., 509 U.S. 209, 224,113 S.Ct. 2578,
`125 L.Ed.2d 168 (1993).
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`501 F.3d 297,306-08 (3d Cir. 2007) (internal footnote omitted).
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`D. Tying
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`Tying involves conditioning the sale of one good on the purchase of another, separate
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`good. See Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d494, 510 (3d Cir. 1998).
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`"The antitrust concern over tying arrangements arises when the seller can exploit its market power
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`in the tying market to force buyers to purchase the tied product which they otherwise would not,
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`thereby restraining competition in the tied product market." Id. In proving a tying arrangement, a
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`plaintiff must allege: "(1) a defendant seller ties two distinct products; (2) the seller possesses
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`market power in the tying product market; and (3) a substantial amount of interstate commerce is
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`affected." Town Sound & Custom Tops, Inc. v. Chrysler Motors Corp., 959 F.2d 468,477 (3d Cir.
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`1992).
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`n. DISCUSSION
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`A.
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`Monopoly Maintenance
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`Blix's amended antitrust allegations do not sufficiently plead the existence of an unlawful
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`maintenance of monopoly in violation of Section 2 of the Sherman Act. Liability imder Section
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`2 requires "(1) the possession of monopoly power in the relevant market and (2) the willful
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`acquisition or maintenance of that power as distinguished from growth or development as a
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`consequence of a superior product, business acumen, or historic accident." United States v.
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`Grinnell Corp., 384 U.S. 563, 570-71 (1966). Apple assumes, only for purposes of this motion.
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`Case 1:19-cv-01869-LPS Document 79 Filed 07/09/21 Page 6 of 11 PageID #: 2846
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`that Blix has sufficiently alleged monopoly power in the market for mobile operating systems
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`("0S")» satisfying the first requirement. (D.I. 71 at 8) But Apple challenges the sufficiency of
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`Blix's allegations relating to the second requirement. The Court agrees with Apple that Blix has
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`failed with respect to this issue.
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`As an initial matter, the Court observes that a fundamental premise of Blix's monopoly
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`maintenance claim is that Apple infringes Blix's patent. That is, Blix contends that Apple has
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`stolen and copied Blix's patented technology as part of Apple's effort to maintain monopoly
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`power. (See, e.g., Cmplt. KK 16,226,350-51) Because the Court has dismissed the patent
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`infringement claims, the patent infringement component of the monopoly maintenance claims
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`cannot constitute improper conduct. Indeed, as Blix's Complaint expressly recognizes: "Apple is
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`free to offer its competing Consumer SSO solution, as long as that product does not infringe on the
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`intellectual property of Blix." (Id. ^ 249) The dismissal of the patent infringement claim,
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`therefore, eliminates at least a substantial portion of Blix's monopoly maintenance allegations.^
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`The core of Blix's allegation seems to be that Apple has constructed a "moat" around "its
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`user base by a series of actions that, individually and especially together, make it difficult and
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`expensive for Apple iOS users to leave the coordinated technological ecosystem;" this moat is
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`allegedly "grounded and protected by [Apple's] monopoly power in its OS." (D.I. 74 at 13) Blix
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`' Blix also alleges what it calls "Sherlocking," which it describes as Apple's "require[ment] that
`every application made available to Apple end users has to be shown to [Apple] first," so that
`Apple can review the application and "decide short of patent infringement, do diey like an idea. If
`they like an idea that someone else had first, they don't have to wait and roll that idea out after the
`application rolls it out" but can, instead, beat the innovative application developer to the market.
`(Tr. at 33-34) The Court agrees with Apple that Blix has not shown, in the context of the
`Complaint, how "Sherlocking" is different from patent infringement or how it provides a
`cognizable basis for alleging competitive harm. (See id. at 13-14, 59; see also id. at 49-50) More
`generally, Blix has failed to explain why the alleged "Sherlocking" - which, again, here does not
`constitute patent infringement - should be viewed as willful maintenance of monopoly power as
`opposed to the exercise of business acumen. See generally Grinnell, 384 U.S. at 570-71.
`5
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`points to a variety of actions that Apple has purportedly taken to maintain its monopoly, including
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`pricing its hardware at a high level, offering proprietary "family" applications, controlling iOS
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`application development and application payment processing, and stealing others' ideas. {Id. at 13-
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`19) For example, Blix alleges that Apple took advantage of its structural advantages to steal from
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`Blix's BlueMail product the idea imderlying Sign In With Apple, a consumer single-sign-on
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`("SSO") option. {Id. at 21-24) In implementing Sign In With Apple, Apple then forced Blix (and
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`other developers) to offer Sign In With Apple as an alternative to other SSOs, thereby "inject[ing]
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`itself as an intermediary between the developer and the user of its app." {Id. at 23)
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`As support for its contentions, Blix unpersuasively draws comparisons to the D.C. Circuit's
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`decision in United States v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001). In Microsoft, the D.C. Circuit
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`held that "[i]f a consumer could have access to the applications he desired - regardless of the
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`operating system he uses - simply by installiug a particular browser on his computer, then he
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`would no longer feel compelled to select Windows in order to have access to those applications; he
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`could select an operating system other than Windows based solely upon its quality and price. In
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`other words, the market for operating systems would be competitive." Id. at 60. There, in
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`squashing the competitive threats posed by emerging middleware competitors in the internet
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`browser market, Microsoft committed actionable anticompetitive conduct based on its existing
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`monopoly in the operating system market, and the two markets were interrelated. See id.
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`Here, Blix suggests that Apple is doing something similar to Microsoft: "work[ing] to stuff
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`Plaintiffs technology before it gets a foothold, so as to prevent competition that would erode
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`Apple's monopoly." (D.I. 74 at 9) Blix, however, has not alleged (nor explained) how Apple's
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`requirement to offer Sign In With Apple means that it is eliminating competition in any market.
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`Blix does not explain how Apple's requirement to offer Sign In With Apple restricts competition in
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`6
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`the mobile operating system market, and it appears to be undisputed that the requirement to offer
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`Sign In With Apple actually expands consumer choice in the SSO market. While Blix views its
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`offering as "a maverick middleware product that poses a fundamental threat to the iOS monopoly
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`in ways that other Consumer SSOs do not" (D.L 74 at 23), its Complaint fails to adequately and
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`plausibly allege how any action Apple is allegedly taking is harming competition.
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`If Blix's allegation is that Apple is maintaining its OS monopoly by squashing competitive
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`threats (specifically, Blix) in the SSO market, then Blix has not adequately pled such a claim.
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`Apple's current policy of requiring Sign In With Apple whenever any SSO product is offered
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`permits new competitors and competition (including Blix) because it does not foreclose the use of
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`other SSOs. Allowing competition is the opposite of unlawfully constraining competition, so,
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`again, Blix has failed to state a claim.
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`In making its arguments, Blix makes another unpersuasive analogy, to Roxul USA, Inc. v.
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`Armstrong World Industries, Inc., 2019 WL 1109868, at * 11 (D. Del. Mar. 8,2019). In Roxul, the
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`Court found anticompetitive effect from an exclusive dealing arrangement, which "prevent[ed] a
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`'maverick'" from ever "achieving a footing in the market." Id. Here, by contrast, there is no
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`exclusive dealing arrangement. To the contraiy, Apple makes implementation of Sign In With
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`Apple voluntary: developers may choose to implement no SSO at all, to implement only Sign In
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`With Apple, or to implement Sign In With Apple in conjunction with other SSOs, such as Google
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`or Facebook. (D.I. 59 H 244) The only thing a developer is not permitted to do is to offer one or
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`more SSOs without also offering Apple's SSO. Clearly, this is not an exclusive dealing
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`arrangement.
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`Blix also attempts to plead its claim based on what it labels a "sand in the gears" theory.
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`{See, e.g., D.I. 74 at 19-21) These allegations do not survive the motion to dismiss, for the reasons
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`7
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`Case 1:19-cv-01869-LPS Document 79 Filed 07/09/21 Page 9 of 11 PageID #: 2849
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`explained by Apple. {See, e.g., Tr. at 15-17) Among other things, the Complaint fails to
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`adequately and plausibly allege that Apple has thrown "sand in the gears" of competition as
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`opposed to just in the gears of a single competitor. Furthermore, the alleged "sand" thrown by
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`Apple at Blix relates to Blix's BlueMail application, which was the focus of the first two
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`complaints, and with respect to which the Court granted Apple's earlier motion to dismiss. {See
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`generally D.I. 42 at 14-15) Blix has provided no persuasive reason why the Court should view
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`these allegations as any less deficient in connection with the operative Complaint.
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`Having found that Blix's claim fails to adequately plead a Section 2 claim on the merits, the
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`Court need not address the parties' arguments as to whether the claim should also be dismissed for
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`lack of antitrust standing.
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`B.
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`Tying^
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`Blix's tying allegations arise under both Sections 1 and 2 of the Sherman Act. (D.I. 59 at
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`91) For the reasons already given, Blix has failed to allege conduct making out a viable Section 2
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`monopoly maintenance claim, so any tying claim predicated on the deficient Section 2 claim must
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`also fail. With respect to Section I, the Court concludes that Blix has also failed to adequately
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`allege the existence of an unlawful tying arrangement.
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`Noticeably absent fi-om Blix's allegations are facts that would suffice to establish the
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`existence of a tying arrangement. "[A] tying arrangement may be defined as an agreement by a
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`party to sell one product [or service] but only on the condition that the buyer also purchases a
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`different (or tied) product [or service], or at least agrees that he will not purchase that product [or
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`service] firom any other supplier." Avaya Inc., RP v. Telecom Labs, Inc., 838 F.3d 354, 397 (3d
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`^ The parties agree that the tying claim must be considered under the rule of reason. {See D.I. 74 at
`25; Tr. at 6-7; see also Microsoft, 253 F.3d at 84)
`8
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`Cir. 2016). No such arrangement is present here.
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`Blix points to the tying product as iOS, within the mobile OS market. (D.L 59 H 360) The
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`tied product is Sign In With Apple, in the consumer SSO market. (Jd.) There are no facts,
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`however, from which it may be plausibly inferred that Apple ties purchases of Sign In With Apple
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`to purchases of iOS. There is no requirement that purchasers of Apple devices running iOS
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`implement Sign In With Apple. Nor is there any allegation that developers must purchase iOS as a
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`condition of implementing Sign In With Apple. (See D.I. 71 at 21) If, as the Complaint seems to
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`allege. Sign In With Apple is not always implemented in conjunction with purchase of iOS -
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`because, among other reasons, developers do not purchase iOS - there is no tie.
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`As Apple has further explained, Blix's allegations indicate that many applications do not
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`require any sign in at all. (See Tr. at 8) Those applications that do require a sign in may require an
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`application-specific sign in instead of an SSO. (See id. at 8-9) It is only when the application
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`offers the additional choice of a single sign in that the application developer is required to also
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`offer Sign In With Apple as a choice (a free choice). (See id. at 9) In none of this, again, is there
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`an adequate and plausible allegation that Apple is coercing anyone to buy Sign In With Apple as a
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`condition of buying mobile iOS. (See generally Tr. at 30) (Blix contending that coercion occurs
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`not at consumer level, but "at the developer level") There is no sufficient allegation of an improper
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`tying arrangement.
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`Apple points to other deficiencies in Blix's tying claim, such as the insufficiency of the
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`allegations of any restraint of trade in the allegedly tied SSO market. (See, e.g., Tr. at 7-8,11-12)
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`Given the Court's conclusions as already explained, the Court need not determine if there are
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`additional dispositive failings in the Complaint.
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`V. CONCLUSION
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`For the foregoing reasons, the Court will grant Apple's Motion to Dismiss Plaintiff's
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`Second Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6). (D.I. 70) As the Court is now
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`dismissing Blix's third complaint, and Blix has been provided multiple opportunities to try to plead
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`its claims, today's dismissal is with prejudice. The Clerk of Court will be directed to close this
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`case. An appropriate order follows.^
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`^ Blix suggests that it should be given yet another attempt to amend its pleadings because of new
`information. (Tr. at 41-42) Even accepting this contention, Blix has had multiple opportunities to
`state an antitrust claim (or patent claim) and has repeatedly failed. Blix has provided the Court no
`basis to conclude that a fourth complaint would be any more likely to state a claim on which relief
`may be granted. The Court concludes, thus, that amendment would be futile.
`10
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